Tesla has cut prices for some of its Model Y and Model 3 vehicles in the US, the sixth time the company has made such a move this year as it looks to spur demand even at the cost of its industry-leading profit margins.
The cuts came ahead of the electric-vehicle maker’s first-quarter earnings due on Wednesday and sent the stock down 2.5 per cent in premarket trading. Shares have risen just a little under 50 per cent this year, after posting their biggest annual drop in 2022.
Tesla’s website showed late on Tuesday that it cut prices of its Model Y “long range” and “performance” vehicles by US$3000 each and of its Model 3 “rear-wheel drive” by US$2,000 to US$39,990.
The company cut US prices of its base Model 3 by 11 per cent so far this year and that of its base Model Y by 20 per cent – moves that come as the United States, its largest market, prepares to introduce tougher standards that will limit EV tax credits.
It also recently lowered prices in Europe, Israel and Singapore, as well as in Japan, Australia and South Korea, expanding a discount drive it started in China in January.
Still, Tesla reported a sequential rise of just 4 per cent in its first-quarter deliveries, much less than the 17.8 per cent sequential climb in the prior quarter.
That has prompted several analysts to predict more price cuts as competition rises at home from rivals such as Ford Motor Co and Tesla plays catch-up with BYD in China, its second-largest market.
For the first quarter, Wall Street expects the company’s auto gross margin to hit a more than three-year low of 23.2 per cent, according to 17 analysts polled by Visible Alpha.
Its revenue is expected to rise 24.2 per cent year-on-year to US$23.29 billion, but analysts’ average profit estimate has fallen by about 2.4 per cent in the last three months, according to Refinitiv data.
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